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It’s never too early to learn about money, savings, and our financial future. Truthfully, we learn so much about it when we are kids and we never realize it until we are older. As children, we watch how the adults in our lives handle bills, savings, giving to others, and even grocery shopping. We tend to emulate that once we are older. So, how do can we make sure our own kids choose the right financial options once they are big enough to do so? We teach them, of course! Here are 5 simple ways to teach your child about money.
Give Them Real Jobs
No, I’m not suggesting child labor. I am suggesting that we stop with the “allowance” and actually give our children real jobs to do in the home. In our house, the kids are on a commission based system. They have a list of items that need to be done, with additional items that can be done for “bonus money.” The main list of items have a set amount of money, while the extra items are part of their commission. If they do the work, they get paid. If they don’t, they don’t get paid. So many parents still give an allowance even when the chores aren’t done correctly. That’s not how real life works, so that’s not how we do it in our home. The best part about the commission bases system is that the kids are always itching to do more and make more. It helps to build up their work ethic.
Assign Every Dollar
When kids get their money from doing chores, or even special money from grandma during the holidays, they may throw it in the piggy bank. It builds up without them knowing how much they are saving or earning. Set your kids up with actual savings, spending and giving goals. Our kids use 3 envelopes to keep track of each of these. We allow them to decide how much they want to put in their save, spend, and give envelopes, but we do tell them that this is where their money need to be kept. Each week, they are able to see exactly how much they have saved toward each goal.
Teach Them How To Spend
When it comes to goals, parents should not only show their kids how to save their money (and why they should), but also how to spend their money. We’ll have to be a little loose when it comes to this. Yes, if they decide to spend all of their money on a toy, video game, or huge bags of candy, we have to let them at first. But, what we can do is encourage them to make a goal for that spending money. If they do want a new video game, have them look up the price and keep track of how close they are getting to that goal. If they want to use their SAVE envelope for a long-term goal, have them keep track of that, as well. I love using Protective’s learning library to find other ways to teach our kids how to spend, save, give. What a great resource!
Be a Budget Spectator
When you sit down to do the monthly budget for your home, let your kids sit in every once in a while. Show them where each dollar goes in the home. Kids tend to be detached from how the adults in their lives actually take care of bills, and pay for the electricity that charges their tablets, TVs, and game systems. This is a great way to show them why you work so hard, and where all of that money goes once you get paid. What to learn how to teach your kids how to budget? Check this out: Teach Kids How To Budget.
Be a Financial Role Model
It’s a known fact that kids learn behaviors from what they see daily. Show them how you treat money by placing it in your savings, or how you try to get as many groceries as you can out of the 100 dollars you took out of the bank. The more open you are about how you handle your finances, the easier it will be for your kids to copy what you do. Also, keep the financial conversation open at all times and let them ask questions. It will always encourage them to earn and save even more money, whether they’re 6, 16 or 26.